Legacy ERP is certainly among the top reasons cited by our prospects for wanting to change their ERP system. In fact, it gets so much attention we thought it warranted a closer look. How can legacy ERP impact a business and what should manufacturers look to do about it?
The Business Impact of Legacy ERP
The impact of a legacy ERP system can be felt across the business in different ways, from the strategic to the operational.
Dealing with the operational first. Many companies with a legacy ERP system worry about their support levels. How many support analysts does the vendor have supporting the product? Is there still the expertise to call upon if something goes wrong? What is the potential impact on business as usual?
Staying with the operational, are there features within the ERP system that are restricting your day to day processing abilities – limits to field lengths, limits to the number of records, performance issues? Are you unable to implement automation to increase productivity, for example integrating your ERP with your Manufacturing Execution System, with your Logistics Provider or even use EDI?
What about your staff morale? How do they feel going home and using other systems and sites, then coming into work and staring at an old fashioned user interface, or worse still, picking through a concoction of Excel and Access databases.
How well can your staff actually use the system? Have you retrained people over the years, have you trained the new people that have arrived? Have you ended up in a situation where there is a single point of failure and only one person internally knows how the system hangs together? What are the risks of that person leaving or retiring?
Then there’s the strategic impact. All commentators on the Manufacturing Sector, from McKinsey, Deloitte and BCG to The Manufacturer or Works Management are talking about Industry 4.0; a technology set ranging from advanced analytics and big data, to intelligent devices and the Internet of Things, to Automation and Robotation. There is common agreement that this fourth manufacturing revolution will improve productivity for manufacturers, but it’s difficult to see how businesses can take advantage of these technologies, without a robust ERP system to pull the technology together.
Massive opportunities lie in integrating the Supply Chain, or automatically sending data back and forth between the ERP system and robots or cobots (colaberative robots) on the shop floor. Productivity gains are there to be had by enabling customers to directly enter and configure their orders, facilitating mass customisation. ERP systems can support the servitization of the manufacturer’s business model by taking data back from intelligent devices in the field and pushing it to service engineers, designers, inventory controllers and so on.
Often the system was fine at the inception ten years ago, however turnover has multiplied tenfold since then, or perhaps it hasn’t but the cost base has risen making data even more critical to running a tight ship. We find companies like this are needlessly spending hours and incurring costs manually transferring data between systems, which a modern ERP system like SYSPRO can automate through DataSwitch.
Modern ERP systems provide many productivity gains, and more accurate and cost effective business information. When implemented with the right processes they help make operational gains such as faster order processing, accurate purchase ordering, efficient production planning, lower inventories and high customer satisfaction. They provide a better working environment for staff and fast access to the information they need to do their jobs effectively. They reduce business risk and provide a strategic platform for future growth.
Doing something about Legacy ERP
Legacy ERP can be categorised in two ways: legacy version and legacy software. The distinction is an important one for customers and ultimately determines the best course of action to address the impact of Legacy ERP.
Some manufacturers find themselves on an old version of a current piece of software. For years they have resisted taking the latest upgrades, perhaps because they had bespoke work which was difficult to upgrade, or simply other operational priorities took over. Now they feel like the jump to the latest software is just impossible.
For these companies, the best route forward is to engage with their ERP Account Manager, talk through the issues they face as a business and work together to create an upgrade plan that works for them.
Other manufacturers find themselves on legacy software. Perhaps the vendor has been bought out in the past and now the software is mothballed. Maybe the software was originally written in-house, or by a local provider who has long since disappeared. Or perhaps the software is maintained to a bare minimum standard whilst the vendor ploughs their investment into other products.
For these companies, the route forward is to go to the marketplace and look at alternative ERP systems which could better add value to their business.
There are some businesses who simply can’t afford a new ERP system, and their existing system can’t deliver what they need. For these companies it may be possible to find an interim solution such as K3 DataSwitch. DataSwitch may enable you to automate the transfer of data with greater accuracy between multiple disparate systems, including the implementation of integration to websites, EDI, logistics companies and corporate head offices.
Pulling the Plan Together
So, given all that, what practical steps should manufacturers take to address the issue of Legacy ERP?
- Determine whether legacy ERP is an issue. List out the operational risks your existing ERP system gives rise to. Understand from a strategic point of view where the business is going and the supporting role ERP has to play.
- Engage with your current ERP vendor. What options do they have in terms of upgrades? Which of their customers have undergone similar changes to the ones you are planning?
- Go to the market. Be clear on your long term and short term objectives and find a vendor that you can work with over the longer term. There’s lots of advice on selecting ERP Vendors available.